Friday, January 20, 2012

Regulated Profits

It's sickening. That's the only word I have for this proposal from a group of Democratic Congressmen this week. Their proposal is to establish a maximum profit level for Energy companies, and impose punishing taxes for any profits over those levels. The war on profit continues. Success is punished to pay for those who will never try to succeed. Do you see the problems with this idea?

Problem Number 1 is the practical impact, instead of wasting capacity for profit making or lowering prices to reduce profits, companies will spread the profits amongst various subsidiaries, or move their profit making units overseas, where they may be heavily taxed, but not punished. This results in a reduction of our countries importance and influence in the world and a reduction in jobs domestically. What this does not do is increase tax revenue. Ultimately it also increases costs for energy to consumers. With companies cutting domestic production to avoid the punitive taxes, supplies of energy will be reduced. Without equally reduced demand, prices will rise steadily. When those prices rise, the consumer has less funds available to spend elsewhere, further damaging the economy. The ripples spread rapidly, don't they?

Problem Number 2, and most important in my mind, is this further erodes the false notion we have in this country of a right to private property. Nevermind that our country was founded on private property rights, that they were crucial to the writing of the Constitution and specifically the Bill of Rights, private property has been under dramatic assault by the Federal Government for decades.

Does this bill have a chance of passing. Not right now, but neither did the Patriot Act when it was first written years before 9/11. But as was proved then, catastrophe can help us make devastatingly stupid choices.